How China’s Crypto Seizures Are Quietly Powering Its Digital Asset Reserves

China’s increasing growth of its strategic digital asset reserves via law enforcement seizures is enabling it to yield more direct influence over the global digital asset ecosystem beyond just mining and holding cryptocurrencies. Despite an existing ban on cryptocurrency activities, China maintains its status as the world’s largest crypto miner, while in parallel, Chinese citizens comprise a significant portion of global crypto users. 

In many cases, these seized digital assets originate from illicit activities, whether this be from criminal networks or from unlicensed financial platforms. While the concept of keeping seized assets to build a country’s own reserve is not unprecedented, the continued custody of digital assets to establish a sovereign digital asset treasury is a relatively new notion, with countries like the U.S. typically preferring to sell off seized cryptocurrencies. Therefore, countries like Kazakhstan and the United States are newer in their crypto stockpile efforts, in contrast to China’s relatively quieter and earlier accumulation of assets. With this in mind, China has a clear head start in growing its influence in shaping the global digital asset economy.  

As more and more nations leverage seized digital assets into their own national reserves, the competition over who owns and controls blockchain-based treasuries will increasingly hold weight over global market dynamics and cryptocurrency norms. 

How Kazakhstan Demonstrates the Power of Digital Asset Seizures for Mid-Sized Economies

Kazakhstan is an excellent example of a country that has been quick to utilize crypto seizures to help bolster its domestic treasury holdings.  

On November 30, 2025, Kazakhstan’s central bank announced that it would invest up to $300m in crypto from its foreign exchange reserves. Just several weeks prior, on November 7, 2025, Kazakhstan announced that it would be establishing a crypto reserve fund worth up to $1b, with funding coming from a mixture of seized assets and the country’s own cryptocurrency mining activities, with some of this funding undoubtedly coming from Kazakhstan’s seizure of nearly $17m in digital assets from 130 illegal cryptocurrency exchanges.  

The ability to leverage law enforcement seizures and transition these assets into a formal crypto reserve is enabling Kazakhstan to position itself as an early adopter of digital asset reserves.  

How China Has Applied Digital Asset Seizures On A Larger Scale

China has gone even further in utilizing seized crypto, with Beijing’s actions enabling it to quietly build a significant position in a variety of different digital assets.  

China’s digital asset war chest is massive, with some reports marking China as the world’s second-largest Bitcoin holder behind the U.S., with estimates of at least 194,000 BTC alone. A large portion of these seized holdings have come from the digital assets recovered from the PlusToken ponzi scheme in mid-2019 which resulted in the recovery of 194,775 BTC, 833,083 ETH, 1.4 million LTC, 27.6 million EOS, 74,167 DASH, 487 million XRP, 6 billion DOGE, 79,581 BCH, and 213,724 USDT.  

While these assets have not been officially labeled a “strategic reserve,” the very holding of them gives China the access and placement to utilize these funds as a formal digital asset treasury. This would enable Beijing to influence global markets in support of its own fiscal and policy goals. In fact, Renmin University’s International Monetary Institute, a government affiliated think tank, called Bitcoin a strategic reserve asset in May 2025, signaling an active debate inside China’s policy circles over treating seized digital assets as reserve holdings. 

 Therefore, the influence that China wields in terms of its digital asset holdings is clearly significant, with its massive holdings being able to establish a strategic digital reserve for the country. However, in light of publicly announcing such an initiative, the Chinese government has been able to reap the benefits of its digital asset holdings through limited and selective liquidation. Beijing’s Municipal Public Security Bureau authority revealed that they would sell off confiscated cryptocurrencies via licensed exchanges based in Hong Kong. Local governments have pursued similar initiatives, with these entities previously liquidating over $420m of seized digital assets via private companies, who have much more leeway to dispose of these holdings on behalf of said local governmental entities.  

These actions highlight how China leverages seized digital assets as a strategic tool that can support Beijing’s priorities, enhancing China’s financial resilience and increasing its influence in global capital markets.  

Seized Assets for America’s National Reserves In the Realm of Strategic Competition 

While China has quietly pioneered the use of leveraging seized assets to build its crypto reserve, America has only recently pursued a similar path, with President Trump announcing the establishment of a strategic cryptocurrency reserve predominately funded from assets seized by the U.S. Treasury Department in March 2025. Previously, the U.S. Department of Justice auctioned off its seized cryptocurrencies, with a July 2025 report detailing how the U.S. Marshals Service holds less than 29,000 BTC, a number far less than expected by industry analysts.  

In fact, just recently in November 2025, China’s National Computer Virus Emergency Response Center (CVERC), a cybersecurity watchdog, released a report claiming that the U.S. Department of Justice unjustly seized BTC that was originally stolen in a 2020 hack targeting the LuBian mining pool. This demonstrates how cross-border seizure operations could serve as flashpoints in the realm of strategic competition. 

This new model converts what had previously been fragmented, agency-level holdings and converts them into a coherent national stockpile. This explicitly links digital assets and their control to American economic security and technological competition. 

Conclusion

By seizing, custodying, and selectively liquidating large cryptocurrency holdings, China has pioneered a model in which law enforcement activity such as seizures feeds directly into state-controlled digital treasuries. As a result, digital asset holdings can be leveraged for financial and political gain. 

Kazakhstan’s adoption of crypto as a reserve asset and the U.S.’ creation of a strategic crypto stockpile show how other governments are also utilizing similar practices. As this trend continues to gain traction around the world, states that control large on-chain reserves will gain increasing abilities to influence markets and shape the next global financial order.  

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